The buying of America
It is no secret that some of the best known firms in the United States are foreign-owned, or partial or total subsidiaries of foreign-owned firms. Many, like A&P, American Motors, Howard Johnson's, and Libby Foods, are almost landmark enterprises in their respective spheres of activity. Despite the sharp increase in recent years in the purchase of US companies by non-American businesses, there has been little public debate or thorough US government analysis of the extent or long-range impact of such takeovers.
There is little confusion, of course, about exactly why firms from other nations wish to buy out US companies, even debt-ridden or ''problem'' firms. Investors from abroad still see the US economy, for all its difficulties, as the strongest in the world. America's stable political environment, moreover, is conducive to the long-term stability required for a successful business enterprise.
Currently, US laws prevent the takeover of American firms that have a national-security role, such as a defense manufacturer. But what about firms that have marginal strategic dealings, but are not engaged in defense as such? Here the law is fuzzy. An example would be the effort by the government-owned Kuwait Petroleum Corporation to buy Santa Fe International, which undertakes vital work in synthetic fuels development and nuclear power plants.
For considerations such as these it is good that a House subcommittee has been taking a hard look at the entire foreign ownership question. The Reagan administration, which has sought to tighten procedures governing the sale of strategic goods abroad (particularly to Soviet-bloc countries), should also consider undertaking a detailed review of exactly how pervasive the current overseas ownership of US firms is.
In saying this, however, it should be added that in terms of ''public benefit'' such ownership usually works in favor not only of Americans but of the overseas firms as well. Investment from abroad has a long tradition within the US, going back to the earliest days of the new nation. Economic historians note, for example, that the transcontinental railroads would most likely not have been able to criss-cross the rugged US landscape in the last century without foreign investment. Foreign firms also provide new management ideas and techniques to the US economy through their subsidiary operations. That keeps US firms on their toes.
And, of course, American firms have long had subsidiary operations in other nations. It would be difficult for the US to justify severe restrictions on such operations within its borders while defending investments by its own firms abroad. For now, at least, what seems to be needed is at the least a clearer understanding of the extent and economic impact of foreign ownership of US firms. Once such a detailed picture is in hand, Congress - and the administration - can then take an appropriate measure of the adequacy of existing laws governing such acquisitions.
